We are often asked the question, why does CalTier invest primarily into Multi-Family real estate assets? For us, there are many reasons why we like Multi-Family as a real estate class, including consistent cash-flow, the ability to adjust quickly to market conditions, marginal impact with single vacancies, and many more. However, how does Multi-Family stack up against other real estate asset classes, particularly if there happens to be a market correction, slow-down, or even a recession?
CBRE recently conducted a study* and found that Multi-Family significantly outperformed office and industrial during and after the last two recessions, in 2001 and again in 2008-2009.
CBRE found that during and after the latest recession, 2008-2009, Multi-Family experienced the lowest level of rent decline, the fastest recovery, and the longest period of growth post-recession when compared to the other major real estate sectors.
What does this mean for investors?
CBRE said, “For multifamily owners and investors, the prospect of a coming recession should offer pause, but not undue concern. Rent loss is likely, but for a limited period of time followed by a strong rebound.”
CalTier understands this possibility and has designed our Multi-Family Regulation A fund in such a manner that allows us to hold onto an asset for longer or shorter periods to adjust to a change in the market.
“While each recession has unique impacts on how businesses and people use commercial real estate, there are some common characteristics. Based on CBRE Research’s analysis of effective rent change during and after the past two recessions, multifamily outperformed office and industrial in the 2001 recession and all major property sectors (office, industrial, retail) during the 2008-2009 recession.”
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*Taken from the CBRE Multi-Family Research Brief February 2019